SHANGHAI, Apr. 22 (SMM) – China’s electrolytic manganese metal (EMM) capacity is expanding rapidly against slack demand. Even producers in Guizhou and Chongqing, who have lower production costs due to lower power tariff and more abundant manganese ore, are also worried about EMM markets. 

 Tianxiong Manganese Industry (50,000 mt/yr in capacity) and Chongqing Wuling Manganese Industry (35,000 mt/yr in capacity), the two biggest EMM producers in Chongqing’s Xiushan County, are in normal operations. Chongqing Wujiang Industry, a subsidiary of Chongqing Wuling Manganese Industry, is planning to bring its 160,000 mt/yr capacity online in Guizhou’s Songtao County. Its phase one 80,000 mt/yr capacity will be commissioned in two batches, with the first 40,000 mt/yr scheduled to enter operations at the end of 2013.  Tianxiong Manganese Industry’s new 100,000 mt/yr plant is now under construction in Yunnan and slated to come online at the end of this year.  

Chongqing Wujiang Industry and Tianxiong Manganese Industry are both pessimistic since acceleration in capacity expansion will compound oversupply pressure this year. In this context, producers have to improve their competitiveness. According to Tianxiong Manganese Industry, effectively controlling costs while guaranteeing product quality is the key to improving competitiveness. The core of cost control lies in lowering manganese ore costs. However, cost control proves to be more and more difficult due to high manganese carbonate ore prices from tight supplies, falling grade of domestic manganese ore and rising comprehensive energy consumption. Although Tianxiong Manganese Industry has its own manganese ore mines, theses mines are insufficient to meet all of its demand. As such, technology renovation is urgently needed. Chongqing Wujiang Industry also sets cost control as its top priority, which includes reduction in consumption and management costs as well as adoption of new technology. Catering to market need is also crucial to improving competitiveness. Besides, higher requirement on environmental protection will force small producers out of the market.         

Jiarun Mining is now installing facilities, with its EMM capacity expected to hit 50,000 mt/yr upon completion in 3Q this year. The company now has its own manganese ore mine, sulfuric acid plant and energy-saving power plant, which will help reduce its production costs. That being said, the producer is also worried about intensified competition from expanding capacity.